Businessmirror november 01, 2015

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three-time rotary club of manila journalism awardee 2006, 2010, 2012

U.N. Media Award 2008

BusinessMirror

www.businessmirror.com.ph

A broader look at today’s business

n Sunday, November 1, 2015 Vol. 11 No. 24

P25.00 nationwide | 4 sections 20 pages | 7 days a week

BSP seen to maintain monetary policy U.S. banks to face D $120-B shortfall in Fed crisis plan By Bianca Cuaresma

week ahead

ECONOMIC DATA PREVIEW n Previous week: The local currency depreciated during the week on the surge of dollar sentiment. The peso started trade on Monday at 46.54 to a dollar to depreciate on Tuesday at 46.72 to a dollar. On Wednesday the peso hit 46.76 to a dollar and further lost value on Thursday to near the 47 territory at 46.9 against the US dollar. The peso corrected after a week’s depreciation on Friday to end the week at 46.82 to a dollar. The total traded volume was at $3.19 billion, while the average for the week is at 46.748 to a dollar—weaker than the previous week’s 46.366 to a dollar. n Week ahead: The Bangko Sentral warned that near-term volatilities may still linger in the market shortly after the US kept its options open for a rate hike before the year ends, but the governor ensured markets that it is ready to step in and participate in the market if volatilities become excessive.

ESPITE renewed talks about a possible rate increase from the United States before the year ends—coupled with the continuously low inflation environment in the country—the Bangko Sentral is not seen to make any adjustments on its monetary policy until the end of the year, an international economist said.

In his latest review of the country’s inflation path, DBS Bank economist Gundy Cahyadi said the central bank has been fairly consistent in its statements this year. “Despite the softer inflation outlook, a rate cut doesn’t look imminent for now. Not as long as GDP growth momentum remains fairly strong, which is currently the case,” Cahyadi said. “The fact that some inflationary risks on food prices persist means that the BSP is also likely to keep its tight policy stance,” he added.

The recent move of the US was also taken into consideration by the regional banking giant— where the Federal Open Market Committee (FOMC) has left the door open for a possible movement on its interest rates before the year ends. “With the US Fed unlikely to be aggressive in tightening its monetary policy, there would be pressure on the BSP to lower its interest rates ahead. This is especially since several central banks in the region have been relaxing their See “BSP,” A2

Tourism industry reeling from ‘tanim bala’ racket of DOTC personnel at naia

Inflation (October)

November 5, Thursday n September inflation: Inflation fell further in September to hit 0.4 percent, according to the report from the Philippine Statistics Authority (PSA) last month. The 0.4-percent September inflation rate is within the central bank governor’s forecast for September inflation, at 0.2 to 1 percent. It is also a further decline from the 0.6-percent inflation seen in August this year. Inflation has been consistently falling for seven consecutive months this year. n October inflation: Bangko Sentral Governor Amando M. Tetangco Jr. said that inflation in October likely remained low and expected to settle within the range of 0.1 percent to 0.9 percent. Currently, the central bank’s forecast for inflation average for the entire 2015 is at 1.6 percent. This is below the government target range of 2 percent to 4 percent for the year. If the inflation for October hits the floor of Tetangco’s forecast, the average inflation for the first 10 months of the year will be at 1.42 percent. Meanwhile, if the October print will be at the ceiling of Tetangco’s target, the average inflation rate for the period of January to October this year will be at 1.5 percent. Both scenarios are below the government’s target range for the year, and would warrant an above 3-percent inflation in the last two months of the year for the target to be reached. Bianca Cuaresma

BusinessMirror media partner

By Lorenz S. Marasigan

T

HE proliferation of the alleged ammunition planting-cum-extortion incidents at the terminals of the Ninoy Aquino International Airport (Naia) is hurting the local tourism industry, with foreign and local travelers expressing their fears of using Manila’s main gateway. Over the past week, there were several incidents of reported detention of individuals allegedly caught with a round of ammunition in their hand-carry luggage. A number of these people, however, denied owning the rounds, and claimed that airport personnel tried to extort money from them. This is a potential setback for the tourism department, especially since it is currently intensifying its efforts to meet its targets of generating $4.6 billion in tourism revenues, attracting 6 million tourists, and creating 3 million jobs by 2016. Such figures will allow the tourism

PESO exchange rates n US 46.8900

industry to contribute 6.35 percent to the GDP. A number of employees of the Department of Transportation and Communications’ Office of Transportation Security (OTS) allegedly plant live ammunition in the handcarry bags of unsuspecting passengers, and later threaten them of imprisonment if they fail to pay a certain amount of money. Several groups have already assailed these incidents, saying that practices of corruption at the airport—even at the grassroots level—is an open secret. Transportation Secretary Joseph Emilio A. Abaya said he has already deployed a team that will take charge of these incidents, saying that such corrupt acts shall not be tolerated by his office. “We are definitely conducting an investigation, and will not tolerate this tanim-bala operation. We have terminated and have filed charges against OTS and airport personnel before, and we will not hesitate to do it again,” he said. Such allegations are so rampant, that the Civil Aviation Authority of

T

HE largest US banks would face a $120-billion total shortfall of long-term debt under a Federal Reserve (the Fed) proposal, aimed at ensuring that their failure would not hurt the broader financial system. Banks, such as Wells Fargo & Co. and JP­ Morgan Chase & Co., will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest US banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022. The broad strokes of the proposal, including the lengthy phase-in period and the 18-percent target instead of what some bankers thought could be as high as 20 percent, are easier than many in

the industry expected. Fed staffers presenting the proposal at Friday’s meeting said the requirement probably will be manageable for the banks. The proposal, along with other measures regulators have taken to avoid chaotic bank failures, “would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms,” Fed Chairman Janet Yellen said in a statement. The plan “is another important step in addressing the ‘too big to fail’ problem,” she said. The rule on total loss-absorbing capacity, or See “US Banks,” A2

See “Tourism,” A2

n japan 0.3871 n UK 71.7980 n HK 6.0506 n CHINA 7.3765 n singapore 33.4046 n australia 33.2035 n EU 51.4758 n SAUDI arabia 12.5030

Source: BSP (30 October 2015)


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